‘Pub prices will keep heading north even as rates rise'
Brisbane publican Albert Hakfoort has tipped pub values to keep rising even as interest rates climb, after snapping up the Lord Stanley Hotel in East Brisbane from ASX-listed landlord Hotel Property Investments and tenant Australian Venue Co for $20 million.
The acquisition is the latest in an almost daily procession of notable transactions in the booming sector, which has recorded more than $2 billion of sales in the past 12 months, and which shows no signs of slowing down.
“I believe that if interest rates keep on increasing at the rate they are it will certainly make people and corporations scrutinise their purchases and the potential returns a little closer,” Mr Hakfoort told The Australian Financial Review.
But, he added: “While the cash rate remains below 5 per cent, I believe the interest and prices in hotels will continue north.”
Mr Hakfoort, whose late father Albert was a well-known business figure and publican in Mount Isa, in north-west Queensland, runs Hakfoort Group with his mother Dianne.
The family own and operate three pubs in Toowoomba, the Tingalpa Hotel in Brisbane’s eastern suburbs and another pub in Bowen in the Whitsunday region.
Generally speaking, pubs were “doing quite well across the board”, Mr Hakfoort said.
“Groups that are liquid as a result of increased turnover are putting their money into what they know, therefore inflating the value of hotels in the process,” he said.
Highlighting the appetite for pubs, the Lord Stanley Hotel sale reflected a tight yield of just 4.6 per cent as a passive freehold investment as it sold at a premium to its book value.
JLL’s Tom Gleeson handled the sale of the hotel, which stands on about a 5500-square-metre site on the corner of Stanley Street East and Didsbury Street, less than five kilometres from the Brisbane CBD.
It is also just a short walk from the Gabba, which will undergo a $1 billion-plus transformation into the main stadium for the 2032 Olympics.
The Lord Stanley sold with 40 gaming machines, a function space, beer garden and a significant underutilised footprint, Mr Gleeson said.
“This sale adds weight to the significant list of hotel transactions for 2022 thus far and provides evidence of the unfulfilled demand for freehold going concern hotels within Queensland,” he said.
The sale follows the Australian Rugby League Commission, which runs the NRL, purchasing the Gambaro Hotel near Suncorp Stadium last month for about $30 million and hospitality group Artesian Hospitality planning a $7 million renovation of the GPO Hotel in Fortitude Valley.
‘The Brisbane market is very strong,” Mr Hakfoort said.
“I recently relinquished the RedBrick hotel in Woolloongabba to [Rich Lister] Bruce Mathieson who saw a future beyond what I could offer that hotel.
“The Lord Stanley seemed to fit the mould for another hotel project. Given the proximity to the Gabba area, I see great potential in the area with the upcoming Olympics and the capital improvements that will bring to the area.”
